Services Australia has been criticised for continuing to raise money through ‘robodebts’ after the scheme had been ruled unlawful. 

A commonwealth ombudsman report this week slammed the agency’s decision to continue “debt recovery action” beyond November 2019; after the government conceded in a federal court challenge to the scheme.

Ombudsman Michael Manthorpe said that over a “period of some months”, Services Australia kept recovering money for debts “which Services Australia knew had a high likelihood of being raised on ‘legally insufficient’ grounds”.

“We consider this created a high degree of risk for Services Australia and unnecessary hardship for individuals affected, which was compounded by Services Australia’s knowledge that the identification process would be largely manual and therefore take some time to complete,” Mr Manthorpe said.

Services Australia told the ombudsman that simply pausing all debts after the process was found to be unlawful “may have caused greater confusion” as people with legitimate debts would have their repayments frozen and then reinstated.

The ombudsman said “the risk and consequences of debt recovery action on debts suspected to be raised on a ‘legally insufficient’ basis” outweighed the “potential disruption”.

The Federal Government last year announced it would pay back about 400,000 people who were sent unlawful welfare debts using the “income averaging” of tax office data as part of  a $1.2 billion settlement.

More details are available here.